FSA: One Third of Takeover Announcements Are Leaked And Result in Insider Trading

"We are particularly concerned about the suspected practice of core insiders strategically leaking inside information;":
 
The U.K.'s FSA, Financial Services Authority, says that up to 29.3 percent of takeover announcements result in market abuse and insider trading. The FSA has told companies to "crack down on leaks to the media before mergers and other deals" and “establish a much stricter culture that firmly and actively discourages leaks.”

Discourage leaks? Since when leaks are legal?

The FSA adds:

"Leaks ahead of announcements threaten market integrity. Strategic leaks2 – designed to be advantageous

to a party to a transaction – are particularly damaging to market confidence and do not serve shareholders’ or investors’ wider interests. It is therefore in all interests to ensure that senior management of all organisations who handle inside information3 establish (and are seen to establish) a much stricter culture that firmly and actively discourages leaks".

The accusations are found in the FSA's Market Watch newsletter: “We are particularly concerned about the suspected practice of core insiders strategically leaking inside information,”
 
"Leaks can be damaging as they can:


• be used to facilitate insider trading;
• impair the flow of inside information to the market in an orderly and fair manner, thereby increasing market volatility;
• prevent companies from legitimately delaying disclosure that can detriment the wider interests of shareholders and investors; and
• result in abnormal price movements ahead of the announcement of transactions, which damages market confidence".

“Despite our focus on how firms could tighten their controls, [...]  leaks do not appear to have reduced,” “We are concerned that senior management at regulated/unregulated firms and issuers may not be doing enough to set a suitable anti-leaking culture.”